In 2001 Clifford Asness, a cerebral but fiery-tempered hedge fund manager with a penchant for comic book memorabilia, penned a paper arguing that his industry’s skills were “overstated”. Understandably, it went down like a lead balloon.

Mr Asness was inundated with irate calls from some of the industry’s biggest names, and even got the occasional glower at school events attended by other hedge fund fathers. “I got yelled at by a lot of famous people,” he recalls.

He survived the opprobrium. Mr Asness’s company AQR is today a major player in the hedge fund industry. Its $226bn of assets under management outstrip even Ray Dalio’s Bridgewater Associates. But rather than a hedge fund, AQR could now arguably be better described as a hedge fund killer.AQR is at the vanguard of a revolution quietly sweeping through the asset management industry: “ Factor investing”, which in theory breaks down market returns into their basic components, researching what drives them and trying to systematically exploit their characteristics.

Factor investing is part of the broader world of computer-powered “quantitative” finance. But rather than scour markets and oceans of data for fleeting signals, factors are the big, persistent market drivers that in theory exploit timeless human foibles, such as our tendency to favour glamorous stocks over solid ones. Financial academics argue that a lot of what asset managers do is take advantage of these well-known patterns, anomalies and inefficiencies. But if one can do so systematically and cheaply, why pay for an expensive fund manager?

“Before, market drivers were like gods in the sky — mysterious and often unfathomable. But with factors we can now understand what actually drives performance,” says Marko Kolanovic, head of quantitative research at JPMorgan.

Think of factors as the basic ingredients of a solid meal. By deconstructing and finding the healthiest components, fans say they can be reassembled into a better-balanced, tastier diet. In other words, a more diversified, robust and cheaper investment portfolio than one built with traditional, blunt asset classes like stocks and bonds.

Recent results have been mixed, with many factor-focused funds — including AQR’s — suffering a mediocre or dismal 2018. But many pension funds, endowments and even retail investors are still embracing this new approach. BlackRock estimates that there are $1.9tn of assets in dedicated factor strategies, and predicts this will swell to $3.4tn by 2022.

Some have even gone so far as to call AQR the “Vanguard of hedge funds”, a reference to the passive investing group founded by Jack Bogle that has helped popularise cheap, index-tracking funds for the masses and unsettled the mutual fund industry in the process.

That may be a step too far to describe an investment group that still boasts plenty of expensive hedge fund strategies, some of which have also struggled in 2018. But it is “what we want to be. It’s aspirational,” Mr Asness admits. It is a description tacitly endorsed by Mr Bogle himself, who has said that among hedge funds AQR “is the one I hate the least”.Defining factors

If you know the other and know yourself, you need not fear the result of a hundred battles.

Sun Tzu

We are travelers on a cosmic journey, stardust, swirling and dancing in the eddies and whirlpools of infinity. Life is eternal. We have stopped for a moment to encounter each other, to meet, to love, to share.This is a precious moment. It is a little parenthesis in eternity.